Hi there
How about a complicated answer to a simple question? I assume you're making the burp cloths at home, probably you have babies and found that the burp cloths you could buy were not meeting your needs? So you started making them yourself, and now you want to sell them?
First off, you have to recognize that if you live in the US there's a pretty slim chance the burp cloths you make in your basement are going to compete on a price point with those being manufactured in Bengladesh and imported by a company like WalMart. So you have to compete on something different, presumably that yours are cuter, have a better cut, are more durable, or are somehow more functional. You'd better figure out what that marketing edge is if you really want to make a go of it.
Secondly, you have to realize that your marketing and distribution channel is going to cost you, and eat into your profits, no matter what channel you use. In your case, your marketing and distribution channels are the same: e-bay. Although this might not be expensive, it's not working. This is probably not working but this kind of item (ie personal sanitation) is not the kind of item peole are going to go out shopping for, they will just buy what they need when they SEE it.
So you will have to go to either local stores to act as your merchandisers, or approach a distributor. If you are making burp cloths in your kitchen, chances are you don't have the consistency in volume to approach a distributor. So I suggest going to your local high-end boutiques and see if they'll sell your burp cloths on consignment. Consignment means that you always "own" the burp cloths, and the store sells them on your behalf. You get the money from the sale, minus the cut the store takes for their effort. Remember, if a store sells your goods instead of your own, then they have lost a sale, so you have to expect to compensate the store accordingly. If the store is already making a 50% mark-up on burp cloths they are already selling, you will have to give them at least the same amount of money.
So this is where point #1 becomes really important. For you to make enough money, after paying the store their cut, you have to make something pretty spectacular that you can charge enough money for it. It has to be a better product. This is exactly the kind of product on which stores like WalMart have built their (extremely successful) business model: it's the kind of thing that can be made really cheaply in low-wage zones and then imported and sold at dirt cheap prices. Good if you're a consumer, but a pretty scary competitor if you want to have a cottage industry in the market which they've made their own playground.
When you approach the stores for consignment sales, your own selling point is that your new-improved-cuter-more durable-whatever it is burpclothes adds value to the consumer experience in their store. If a consumer finds the 'perfect' burp cloth and buys it, then you have a happy customer who's likely to come back.
Chances are, unless you are wiling to devote heart and soul into manufacturing and distrubuting burp coths, you will never want to go far beyond the consignment sales in specialty stores. Once you start dealing with distributors who supply multiple stores, you have to supply a volume which you won't be able to match from your home. If you develop a relationship with five or six stores, you may find that after a while they are willing to simply buy your product instead of dealing with the headache of consignment. This next step saves you and them hassle: you made get less money per unit, but your sales volume will go up. Ideally, with increased volume you make more than enough money that the reduced price per unit it unimportant.
I hope you find this advice helpful. I used to have an at-home manufacturing business in which I made specialized outdoor sports gear. This is the model I used, and it paid my way through university. I decided not to go to the next level and eventually abandoned the business. Not long after, I saw copies of my products being made on the other side of the country.
Good luck!
